Eight people were killed in a mass shooting at Salon Meritage in Seal Beach on Oct. 12, 2011.

October 9, 2012 12:00:00 AM PDT

SEAL BEACH, Calif. --

Attorneys for the owner of a Seal Beach salon where a mass shooting took place in 2011 filed a lawsuit against the store's insurance company Tuesday.

A mass shooting occurred at Salon Meritage in Seal Beach on October 12, 2011. The suspect was the ex-husband of one of the hairstylists at the salon. He entered the business and shot everyone in sight in the location. He was later arrested and charged with eight murders. It was the worst mass-murder in Orange County history and made national headlines.

Sandra Fanning is owner of the salon; her husband was among those murdered in the salon. Fanning hid in a back room during the shooting, in which her husband and friends were killed.

All of the salon's hairstylists were killed in the shooting. The property was stained with blood and riddled with bullets.

Fanning was in an emotionally distressed state after the shooting. Friends helped her with daily affairs and assisted in filing an insurance claim for losses of property and income due to the shooting.

The salon was covered by Employers Mutual Casualty (EMC). Tuesday's lawsuit contends EMC breached its duty of good faith and fair dealing, and intentionally inflicted emotional distress on Sandra Fanning.

For six months, EMC investigated the claim filed by the salon. The company told Fanning she was entitled to 30 days of business interruption payments. The lawsuit contends EMC delayed payments and offered Fanning only half of the daily business income loss.

The lawsuit says EMC did not return emails and phone calls and treated her with disdain in communications and in person when an adjuster examined the premises of the salon.

If EMC had performed a "reasonable investigation," according to the lawsuit, it would have determined the salon could not open in 30 days.

"If the company wasn't purposefully delaying the claim, then it was a model of ineptitude," says the lawsuit.

Fannning is asking to be awarded full amount of benefits under the policy, along with general and special damages, punitive damages, attorneys costs and fees. The lawsuit was filed by Shernoff Bidart Echeverria Bentley LLP.

EMC released a statement in response to the lawsuit Tuesday:

"EMC understands that our insured, Ms. Fannin, has suffered a very tragic loss," said Rich Schulz, senior vice president of claims at EMC Insurance Companies. "We endeavored to handle the property loss claim of our insured in a reasonable manner. Prior to the filing of the lawsuit, we paid all of the undisputed damages, but had been unable to come to a final agreement on the amount of the business interruption claim. Once we have a chance to review the lawsuit in full, we will respond to Ms. Fannin and her representative."